The volumes on Defi has been on the rise over the last few days following a series of events involving centralized exchanges. In recent developments, the United States Securities and Exchange Commission (SEC) has been making headlines with its lawsuits against prominent centralized crypto exchanges such as Binance.US and Coinbase. However, it is important to note that the SEC is also actively pursuing cases against decentralized exchanges (DEXs) within the cryptocurrency ecosystem. This approach by the securities regulator has faced criticism from players like crypto venture capital firm Paradigm, which asserts that DEXs should not be classified as securities exchanges.
Defi volumes hit 440% following SEC lawsuit
Additionally, a U.S. district court recently dismissed a lawsuit against DeFi protocol PoolTogether. Notably, the community supporting the protocol had raised $1.4 million through a nonfungible token (NFT) sale in 2022 to fund its legal defense. This outcome highlights the decentralized nature of the DeFi space and its ability to rally support from its community.
While the DeFi market experienced a bullish start to June, the momentum was short-lived due to the SEC’s enforcement actions in the second week. As a result, the majority of the top 100 DeFi tokens traded in the red, causing the total value locked in DeFi to fall below $50 billion again.
In response to the SEC’s recent legal actions against centralized exchanges, crypto investors turned their attention to decentralized exchanges, leading to a significant surge in trading volumes. Aggregated data from CoinGecko reveals that the median trading volume across the top three DEXs, namely Uniswap v3 (Ethereum), Uniswap v3 (Arbitrum), and PancakeSwap v3 (BNB Smart Chain), increased by a staggering 444% within the past 48 hours alone. These three exchanges accounted for 53% of the total DEX trading volume in the last 24 hours.
Investors are looking for an escape route from centralized exchanges
During the period between June 5 and June 7, the combined daily trading volumes on the aforementioned DEXs grew by more than $792 million, as reported by CoinGecko. This surge in trading activity indicates a shift in investor sentiment towards decentralized platforms as a response to the SEC’s actions against centralized exchanges.
However, despite the increased trading volume, the overall market value of the DeFi sector witnessed a bearish decline in the past week. Cointelegraph Markets Pro and TradingView data indicate that most of the top 100 DeFi tokens experienced double-digit losses, with the total value locked in DeFi protocols dipping below the $50 billion mark.
While DEXs have faced scrutiny from the SEC as well, they have garnered support from industry players who argue that they should not be treated as securities exchanges. Nonetheless, the recent market downturn has affected the value of DeFi tokens, leading to a decline in the total value locked in DeFi protocols. The dynamic nature of the cryptocurrency market continues to shape the landscape of both centralized and decentralized exchanges, with regulatory actions playing a significant role in investor behavior.
